‘Big mistake’: Singapore hedge fund shuts down as investors run away with wrong bets on Chinese and Japanese stock markets

In a letter to fund investors obtained by the newspaper, the fund said it would return the money to investors as it was the logical and prudent way to avoid further losses. Genesis suffered unprecedented withdrawals of about 19% of its funds in the first few weeks of this month.

“We made a big mistake with the recent sharp moves in Nikkei and Hong Kong, which went in the opposite direction,” founder and chief investment officer Chua Soon Hock said in the letter. Ta. “Despite current economic realities, we are surprised by the incredible Nikkei Hang Seng spread that has set the prices of Chinese and Japanese stocks at the same value as they were in 1991.”

The company declined to comment. Chua did not immediately respond to calls and text messages seeking comment. Bloomberg reported the fund’s closure early Tuesday.

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“We made another mistake by trying to find the bottom of the Hang Seng Index and Hang Seng Tech Index,” he said in a letter to investors. “I still don’t understand how the paradox of Chinese policymakers not fighting deflation has led to a continued decline in market confidence and a prolonged bear market.”

Investors turned bearish on Chinese stocks as soon as China’s post-coronavirus recovery lost momentum early last year. Foreign funds have withdrawn more than 217 billion yuan (US$30.4 billion) from domestically listed stocks in the past six months, but the Chinese government has decided to either introduce stronger stimulus or spend US$100 billion on I am undecided as to whether to withdraw the “Great Red Line” policy. Bond defaults occur among real estate developers.

Goldman Sachs said in a note to clients on Monday that the past three years have undoubtedly been “a difficult and frustrating period” for investors and market participants in Chinese stocks.

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According to Goldman, Chinese stocks suffered a 61% withdrawal by investors during the period, with the total market capitalization of stocks listed on the mainland, Hong Kong and the United States falling by 30%.

The market valuation in terms of price-to-earnings ratio also fell by 56%, and funding across all markets in Hong Kong and China fell by 58%, the US investment bank added.

“I have reached a stage where I have lost confidence as a trader,” Chua told investors in a letter nearing closure.

“The recent tough trades – October, November and December 2023 followed by a disastrous January 2024 – have shown me that my past experience is no longer valid and is actually working against me. ,” he added. “I lost my knowledge, my trading, and my psychological advantage.”